February 09, 2009

How to Know Whether Content Aggregators’ Use of Third Party Content is Fair Use Under Copyright Law

What is copyright fair use? We often receive questions from clients about the copyright law implications of content aggregators. Content aggregators, to be clear, are business models in which content from the web produced by others is repackaged in a value-added manner. Value is added to the aggregated content through the addition of user voting schemes, social networking, message boards, or other community building methods. The question we most often receive: “Is this fair use under the Copyright Act?”

As with many legal questions, the answer is, “It depends.” Unfortunately, the Copyright Act is purposely vague when it comes to its definition of fair use. One thing is clear, however: fair use is not infringement. Section 107 of the Copyright Act states:

[T]he fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;(2) the nature of the copyrighted work;(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and(4) the effect of the use upon the potential market for or value of the copyrighted work.

We can discern a few guidelines from this section. First, it appears that criticism, comment, news reporting, teaching, scholarship, and research are a few of the important types of fair uses that Congress intended to preserve in codifying the common law in this section. The use of the language “such as” tells us that this list is by no means exhaustive, but it is a safe bet that courts will give significant weight to arguments for fair use falling within these enumerated categories. Second, Congress has outlined four factors to consider in determining whether a use is “fair.”

The four-factor fair use analysis is determined on a case-by-case basis. No hard and fast rules can be pulled from the case law, but some governing principles can aid in the analysis. One must also keep in mind that the four-factor list is not exhaustive. In fact, esteemed Judge Richard Posner has said that all four factors could fall in favor of the defendant and yet he would still find no fair use. The analysis is certainly a “totality of the circumstances” test.

The first factor, the purpose and character of the use, suggests that a non-commercial use will lend to a finding of fair use. This is deceptive, however, because most uses are commercial in a sense. Even if a use is seemingly non-commercial, such as news reporting, it can still be supported by advertisements, such as pay-per-click ads. The Supreme Court, in Campbell v. Acuff-Rose Music, Inc., emphasized that a “transformative” use, or one that creates something new from the appropriated material, will be more likely seen as a fair use; the more transformative the work, the less significant the other three factors.

The second factor, the nature of the copyrighted work, questions whether the appropriated work is one that is close to the core of copyright protection. Those works that show more originality retain more protection. Relevant questions are whether the work is fictional or non-fictional, or whether it is a selection and arrangement of pre-existing facts.

The third factor, the amount and substantiality of the use, examines how much has been used in relation to the entire copyrighted work. Typically, the less used in relation to the whole, the more likely fair use will be present. This is not a clear rule, however, as courts have said that a complete appropriation of a work can be fair use under the right circumstances. De minimus use, a use that is trivial, is typically seen as fair use per se.

The final factor, the effect of the potential market for the value of the copyrighted work, questions whether the appropriator’s use will act as a market substitute for the creative work of the copyright holder. The use of the word “potential” is particularly important because the copyright holder need not have expanded into the copyright holder’s market niche or even have prepared plans to do so; courts look to whether the appropriator has violated one of the copyright holder’s §106 rights, such as the right to derivative works. If the appropriator’s work is likely to displace the copyright holder’s in the marketplace, courts are very likely to find no fair use.

So what does this mean for content aggregators? It is likely that they fall under fair use provided they do not use a significant amount of the content creator’s work. Transformative sites that add voting and social networking functions to content may have even greater protection under the fair use exceptions. Though a lot of the original content located on those sites is relatively close to the core of copyright protection, very little of the content is used—typically just a headline and a paragraph. Finally, and most importantly, these content aggregators may not displace the content provider’s work in the market. In fact, content aggregators may create additional SEO and community value for content providers and redirect more users to their works.

As previously stated, fair use is an extremely ambiguous area of copyright law and it is always best to contact an attorney familiar with your business model for a fair use assessment. If you believe that your business model presents fair use concerns, contact a copyright attorney today.

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